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Structure 09: Cloud Computing is Changing the World, But My Old Products Will Still Work

Balakrishna Narasimhan

Last week, I attended GigaOM’s Structure09 conference, which was an interesting and well-run conference. It was fun to see industry thought-leaders like Werner Vogels, Marc Benioff, Chuck Hollis, James Urquhart and many others. For me, the conference confirmed many of the things we’ve written about recently:

1) Broad acceptance that enterprises are interested
There’s absolutely no question that cloud computing has moved into the mainstream of enterprise technology. Everyone from Microsoft to Accenture to HP to IBM to SAP admitted as much. With the worsening economic conditions and the maturation of cloud computing services, enterprises are actively investigating cloud computing. The main differences of opinion between the legacy vendors and companies like Salesforce and Amazon lie in how quickly and broadly companies will adopt cloud computing.

2) Big vendors still at conceptual level, and trying to constrain the cloud
Large vendors like HP, IBM, SAP and Microsoft are still grappling with cloud computing at a conceptual level. It’s clear that they recognize the importance of the profound shift that’s happening in the industry but are not sure what to do about it.

Russ Daniels, HP’s CTO of Cloud Services, talked about cloud computing as the brain that sits above the nervous system of the internet, and HP’s vision of “everything-as-a-service”. While interesting conceptually, there was little beyond abstract concepts in Russ’ talk. If you were listening closely, there were also hints of how HP wants to preserve the status quo. While saying that the cloud was transformational, Russ made a point of saying that the cloud is best for solving new problems rather than for business automation, which current systems and processes do very well. I agree that the cloud can help solve new problems or enable new processes but it’s also very disruptive to the status quo. Current approaches to business automation are expensive, brittle and leave CIOs managing the entire stack. Cloud platforms and applications change this completely and enable nimbler, faster processes.

Microsoft’s Yousef Khalidi admitted that every enterprise he’s talked to recently wants to move to the cloud but are held back by concerns about trust, performance and availability. He went on to say that enterprises have a variety of workloads, many of which will stay on-premise for a long time. It’s hard to disagree with that premise but the question is whether Microsoft is really going to accelerate the movement of the majority of workloads to the cloud, given what that would mean to their revenues and profits.

SAP’s Vishal Sikka continued along the themes he used in a recent CIO.com interview. He acknowledged the importance of cloud computing, but at the same time said that it’s best suited to “simple transactions” and edge process within enterprises. Japan’s largest employer would beg to differ with Vishal.

IBM’s Willy Chiu talked about how IBM is approaching cloud computing from the ground up. They’re partnering with universities to improve education on the topic and creating global innovation centers to explore use cases. I was impressed by the comprehensiveness and ambition of the approach. However, I was disappointed by the conclusion – companies can adopt cloud computing by purchasing a “Cloudburst” appliance, then having IBM build them a private cloud, and eventually by moving to IBM’s public cloud. This sounds an awful lot like a “cloudwashing” of IBM’s current offerings.

3) Too much discussion of clouds at the infrastructure rather than platform layers
The entire cloud conversation at Structure was very focused on infrastructure. As Daryl Plummer of Gartner has noted, Cloud computing is not about infrastructure. It’s about a new delivery and consumption model for IT services that are elastic, metered and abstract away the SW stack. The conference was mostly focused on the lowest layer of the stack and didn’t really talk about how the cloud enables transformation at the business process level. Greg Papadopoulos of Sun was one of the few people to talk about this, although he didn’t dwell on it.

The thing that excites us most about cloud computing is its ability to help companies achieve the impossible. A great example of this is Starbucks’ Pledge5 campaign. 21 days before the inauguration, Starbucks decided that they wanted to launch a national campaign (online, in stores and on Facebook) to drive community service across the nation. They needed to build a massively scalable infrastructure and application to do this. Before the cloud, this would’ve been hard to pull off even in time for the next inauguration. With Salesforce’s Force.com platform, we were able to quickly build an application that performed flawlessly in supporting over 1M transactions across 10,000 store locations and millions of Facebook and Twitter fans.

The danger with just talking about infrastructure is that we miss the broader opportunity to engage the business and turn this into a conversation about achieving business outcomes faster and cheaper, rather than conversations about bits and bytes, which causes every business owner’s eyes to glaze over. The cloud enables IT to change the conversation and it was unfortunate that this was rarely mentioned during the day.

4) Little mention of customers until Marc Benioff
The highlight of the day was Om Malik’s interview with Marc Benioff. Marc brought not only brought his trademark humor to the event but brought a much-needed pragmatism and focus on what really matters. Customers. Marc was literally the first person all day to mention customers. He gave the room, which was largely composed of vendor marketing types, the best advice that we’ll get – “Customers have been sold to by vendors for 30 years and they’re tired of it. Customers want to talk to other customers and learn from them.” Great advice and something we should take to heart.

In fact, we’re turning that idea into action in the coming weeks when we’ll start a new series of posts with our customers. If you’re interested in being featured, leave us a comment below.

5) A few fun highlights of the day
Marc on Larry Ellison
Larry said something really zen on the earnings call – without on-demand, there’s no on-premise and without on-premise, there’s no on-demand.

Marc on Microsoft

I hear Microsoft is coming out with an Azune cloud.

and finally, Om’s fly threads

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